KUALA LUMPUR: Malaysian palm oil futures bounced back on Tuesday as crude prices rose, but gains were limited by fears that the surge in demand and exports would eventually lose steam if there is a second wave of Covid-19 infections.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange settled up 21 ringgit, or 0.85%, at 2,466 ringgit ($577.38) a tonne, after falling as much as 1% earlier in the day.
Crude oil prices rose after a volatile session sparked by confusion over the status of the US-China trade deal. Stronger crude futures make palm a more attractive option for biodiesel feedstock.
Earlier, markets were spooked by surprise comments from White House trade adviser Peter Navarro that a hard-won US-China trade deal was "over", although US President Donald Trump later assured that the pact was intact.
Malaysia's palm oil exports for June 1-20 jumped between 55.3% and 57% from a month earlier, according to data from cargo surveyors, after the easing of coronavirus curbs and an export duty exemption.
However, the market lacks follow-up buying from destinations such as China, Pakistan, Bangladesh and Europe to sustain the exceptionally strong exports, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
The Malaysian Palm Oil Council on Monday said exports were likely to increase further in the second half of the year, but a leading analyst cautioned that global consumption of the edible oil would fall for the first time on record.
Dalian's most-active soyaoil contract fell 0.62%, while its palm oil contract was down 1.01%. Soyaoil prices on the Chicago Board of Trade dropped 0.34%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Comments
Comments are closed.